Sodexo: Strong recovery continues, Q1 Fiscal 2022 revenues +18.8%

  • Organic revenue growth +17.5%
  • Activity back up to 95% of pre-Covid levels
  • Good control of inflation during the quarter

Q1 Fiscal 2022 revenues

"The recovery in the first quarter has been strong."

"The Group reached 95% of pre-Covid levels this quarter with Benefits & Rewards services, Healthcare & Seniors, Schools and Facility Management services now well above pre-Covid levels and strong improvements in Sports & Leisure, Universities and Corporate Services. Recovery is accelerating in Food Services. All geographies are contributing to this growth and particularly North America.

We have signed new contracts with innovative offers to help our clients attract consumers back on site through more convenient and flexible services.

Our business model allows us to pass the inflation on to clients progressively. Cost plus contracts, negotiations with clients and mitigation action plans are also helping to compensate inflation.

While the new reinforced sanitary measures are being deployed in many countries to contain the spread of Omicron, our teams are fully mobilized on-site to ensure that action plans are in place. It is too early to estimate whether there will be an impact on guidance. At this stage, we maintain our annual guidance and remain confident in the continued recovery."

Sophie BellonChairwoman of the Board and Interim CEO

Highlights of the period

  • First quarter Fiscal 2022 consolidated revenues reached 5.3 billion euro, up +18.8% year-on-year including a net contribution from acquisitions and disposals of -0.9%, more than compensated by a currency impact of +2.1%. As a result, organic growth was +17.5%.
  • On-site Services revenue organic growth was +17.9%. The ongoing recovery is visible in all segments, geographies and services. Healthcare & Seniors and Schools segments are now well above pre-Covid levels at respectively 105% and 104% of Fiscal 2019 revenues, adjusted for currencies. Corporate Services, Sports & Leisure and Universities all increased very substantially during the quarter, as employees returned to their offices, students to their universities and stadiums and convention centers reopened. As a result, Food Services also recovered strongly in the quarter, to reach 83% of Fiscal 2019 levels.
  • Benefits & Rewards Services is also now back on a growth path, relative to the pre-Covid levels at 107% of Fiscal 2019. Revenue organic growth was +7.0%, with Europe, USA and Asia up +6.9%, now well above Fiscal 2019 levels, and Latin America up +7.3%, with a strong recovery in Brazil, in particular.
  • During this first quarter, Sodexo continued to reinforce its commitments to reduce its environmental footprint.
    • In October 2021, Sodexo in the United Kingdom & Ireland has announced a comprehensive roadmap to net zero and decarbonization of its business. Having already exceeded Group’s target to reduce carbon emissions by 34% by 2025 (compared to a 2017 baseline), the region has set its next steps,
      • to become Carbon Neutral in its direct operations by 2025.
      • to reduce carbon emissions across all three scopes by 55% by 2030.
      • to decarbonize United Kingdom and Ireland business, with 90% of all carbon emissions cut across all three scopes, by 2045.
    • Once again, Sodexo’s commitments were recognized by the 2021 Dow Jones Sustainability Indices (DJSI), Sodexo remaining at the top of its industry for the 17th consecutive year.

Outlook

The strong recovery in the first quarter provides a solid start to the year with organic growth at the high end of the range. With regards to Omicron, the recent sanitary measures taken by Governments will have an impact on activity, but it is too early to assess whether it is significant or not. So, at this stage, excluding potential impact if any of accounting changes , we maintain annual guidance of:

  • Fiscal 2022 organic growth expected between +15 and +18%.
  • Fiscal 2022 Underlying operating margin of close to 5%, at constant rates.

Looking further out, we expect On-site services to exceed pre-Covid levels and the performance of Benefits & Rewards Services to accelerate out of the crisis. Our aim is that the Group rapidly returns to regular and sustained growth and over the pre-Covid Underlying operating margin. Accelerated growth in North America and deployment of new food models, active portfolio management, a more effective organization and the structural reduction in SG&A will all contribute.

To read the full version of the press release, please download the PDF:

The press release and presentation will be available on the Group website www.sodexo.com in both the "Latest News" section and the "Finance - Financial Results" section.

Conference call

Sodexo will hold a conference call (in English) today at 9:00 a.m. (Paris time), 8:00 a.m. (London time) to comment on its for Fiscal 2022 Q1 revenues. Those who wish to connect

  • from the UK may dial +44 2071 928 338, or
  • from France + 33 1 70 70 07 81, or
  • from the USA +1 646-741-3167,
  • followed by the access code 23 96 830.